Low electricity price: 'trap' to attract outdated, energy-intensive technologies

Low electricity prices without being promptly adjusted to reflect fluctuating input costs not only exposes Vietnam Electricity to financial balancing difficulties but also can be a "trap" to attract energy-intensive technologies to Vietnam.

In the recent dialogue “Taking into account all factors correctly and sufficiently to develop a proper electricity price”, according to economic expert Tran Dinh Thien, Vietnam's electricity price is heavily subsidized to be kept quite low, although, for several recent years, input costs for electricity production have soared up.

“Low electricity price leads to wasteful electricity consumption and, at the same time discourages investors’ participation in electricity generation. If we maintain low electricity prices as now, we are likely creating a technological "trap", that is, only targeting investors with outdated, electricity-intensive technologies, thus adversely affecting the economy", expert Tran Dinh Thien expressed.

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Sharing this point of view, energy expert Ha Dang Son said, the Law on Economical and Efficient Use of Energy has been promulgated since 2010. At that time, such economical and efficient energy consumption activities were implemented vigorously since there was a huge room to apply energy-saving solutions with low investment costs and high efficiency. Up to now, after a lot of efforts of the Ministry of Industry and Trade and related ministries, we have reached the "threshold" of low-cost solutions.

In Vietnam, to implement solutions for economical and effective energy consumption, large enough investments should be made to change production and technology lines. However, given the current electricity price, businesses have little "motivation" to invest in new and energy-effective technologies.

“If we are maintaining low electricity prices to meet social security-related goals, consumers will have no motivation to change their consumption behaviors and habits. It can be seen many investors in Vietnam now are relying on obsolete and energy-intensive technologies. This is a waste. In essence, we are subsidizing businesses using non-advanced technologies" - Mr. Ha Dang Son shared.

It must be affirmed that electricity plays a vital role in socio-economic development. In recent times, power investment and development policies have been attached to importance by the Prime Minister, the Government, ministries, and authorities via synchronous, effective, and prompt directions to put them into practice. Thereby, Vietnam Electricity in particular, and the power sector in general have well performed assigned tasks, contributing to promoting socio-economic development. However, in recent years, due to climate change impacts and the influence of the global political situation, input costs for electricity generation have sharply increased. Meanwhile, to stabilize the macroeconomy and realize social goals, the electricity price has not been determined correctly or adequately. This reality has caused many difficulties for the power sector as well as created consequences for energy use.

Therefore, according to experts, it is time for the electricity price to be determined correctly and adequately, reflecting input costs and; at the same time, ensuring macroeconomic stability in accordance with the Party and Government's policies. Having a correct and complete pricing mechanism driven by market principles is also an objective requirement, leading the development of the power sector in particular and the country in general.

  • 07/11/2023 11:36
  • evn.com.vn
  • 60